Trade Idea: NZD/USD Fibonacci Resistance

After a knee-jerk reaction to comments from the Donald, NZD/USD is back up to an area I’ve been watching for a short-term position to play today’s driving themes.

NZD/USD Trade Idea

NZD/USD 1-Hour Forex Chart

NZD/USD 1-Hour Forex Chart

Last week, I spotted a channel and potential support-turned-resistance area on the 1-hour NZD/USD chart that’s now being tested, likely due to broad Greenback weakness off of comments from U.S. President Donald Trump this week on the U.S. dollar being “too strong.”  Despite the reaction, the pair is still in a downtrend and stochastic is back in overbought territory, plus I’m still fundamentally biased in favor of the U.S. dollar over the Kiwi.  Even though we did get a weaker-than-expected U.S. employment report for March last Friday, Forex Gump pointed out in his latest economic Snapshot of New Zealand that the trade data could hurt Q1 GDP data, likely giving the U.S. a growth advantage once all the numbers come out.

Finally, with geopolitical tensions rising in the Middle East (Syria and Afghanistan) and in Asia over North Korea, odds are rising fast of a risk-aversion type event happening for the markets, which also makes the U.S. dollar more attractive over the New Zealand dollar as a safe have play.

Anyhow, I’ve gone short at market with a 2 daily ATR stop (above the recent swing high) to give the trade breathing room and my max target is twice my risk for an attractive reward-to-risk ratio. Here are the deets:

Short NZD/USD at market (.7000), stop loss at .7125, profit target at .6750

I risked 0.50% of my account on this setup for a potential 2:1 return-on-risk. Don’t forget to check out our risk disclosure if you’re trading this one, too!

Cheers,

Happy

See also: Q4 2016 Trading Performance Review